Real Estate Watch: Too early to call off the crisis in Western markets
These past few weeks have been all about China and China is all about real estate. With that, welcome to this week’s real estate-focused edition of the ‘Watch Series’, where we look for clues on the state of the US parallel in particular.
Our findings in brief:
- Favorable fixings…
The NAHB Housing Market Index pulled back in August to 50 against an estimate of 56 and 56 in the previous month. All components declined with traffic of prospective buyers deteriorating the most, and future expectations for sales contracted for the second consecutive month. Additionally, mortgage purchase applications slipped for the fifth week in a row – down some 12% over the last seven weeks.
The reason? With average 30-yr fixed mortgage rates currently at 7.15% and prices still not really budging, the NAR affordability index is at a time series low.
Chart 1: Record low affordability